- Cites current market conditions as reason in notice to Pakistan Stock Exchange
Textile giant Nishat Chunian Limited (NCL) on Wednesday announced that it will partially shut down its spindles from January, citing market conditions.
The development comes as Pakistan faces multiple challenges, including rising debt, low foreign exchange reserves, and an energy shortage, pushing companies to either shut down or limit their operations.
The textile manufacturer, in a statement to the Pakistan Stock Exchange (PSX), informed that the spindles would restart operations after improvement in market conditions.
“The company has an installed capacity of 219,528 spindles and 2,880 rotors in its spinning division. The company has decided to temporarily close 51,360 spindles after one month, due to current market conditions,” said Nishat.
“However, the remaining units are operating normally,” it said. “The company will restart these spindles as soon as market conditions improve.”
NCL is a public limited company incorporated in Pakistan under the repealed Companies Ordinance, 1984.
The company is engaged in the business of spinning, weaving, dyeing, printing, stitching, processing, doubling, sizing, trading and dealing in yarn, fabric and made-ups from raw cotton, synthetic fibre and cloth. It also generates, distributes and thus, supplies and sells electricity.
The textile sector, which remains Pakistan’s largest generator of export receipts, is feeling the heat of economic slowdown as well.
Days ago, the All Pakistan Textile Mills Association (APTMA) warned that the country’s textile exports could fall below $1 billion a month from 2023 onwards, highlighting a range of issues facing the sector that is currently operating at less than 50% capacity utilisation.
In a letter addressed to Prime Minister Shehbaz Sharif dated December 23, 2022, APTMA’s Patron-in-Chief Gohar Ejaz attributed the decline to supply chain disruptions, liquidity constraints, energy shortages, and non-functioning of new projects.
Earlier this month, Kohinoor Spinning Mills Limited (KOSM), a manufacturer and exporter of yarn and cloth, and stitched cloth, decided to temporarily close its production facility, refraining from giving a timeline on the length of the shutdown.
“Due to prevailing global and economic downturn, overdue plant maintenance, high cost of production and low demand, it is not feasible to operate the production facility.
“Therefore, the management of the company has decided to temporarily close/stop the production activities of the company with immediate effect,” said the textile company back then.
Last month, Pakistan Hosiery Manufacturers and Exporters Association (PHMEA) expressed serious concern over the declining trend in textile exports and called for the continuation of Duty Drawback of Local Taxes & Levies (DLTL) Scheme to ensure growth in the country’s exports, besides releasing the stuck up claims of 2019-20 under this scheme.